SM Energy Co (SM)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,005,830 | 1,516,120 | 206,520 | -792,813 | -71,942 |
| Long-term debt | US$ in thousands | 1,575,330 | 3,144,420 | 3,754,620 | 2,214,320 | 2,610,300 |
| Total stockholders’ equity | US$ in thousands | 3,615,850 | 3,085,460 | 2,063,130 | 2,016,160 | 2,748,990 |
| Return on total capital | 19.38% | 24.34% | 3.55% | -18.74% | -1.34% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,005,830K ÷ ($1,575,330K + $3,615,850K)
= 19.38%
The return on total capital for SM Energy Co has fluctuated significantly over the past five years. In 2023, the return on total capital was 19.01%, showing a decrease from the previous year's level of 34.07% in 2022. Prior to 2022, the return on total capital was positive but relatively lower, with 5.89% in 2021, -1.25% in 2020, and -0.67% in 2019.
The positive return on total capital in recent years indicates that SM Energy Co has been generating profits from its capital investments. However, the downward trend from 2022 to 2023 suggests a possible decline in the efficiency of capital utilization or profitability. It is essential for the company to assess the factors contributing to this decline and take appropriate measures to improve its return on total capital to ensure sustainable growth and long-term profitability.
Peer comparison
Dec 31, 2023